Millions spent on settlement of false injury claims

MASS TRANSIT'S GRAVY TRAIN

It's nearly 6 o'clock on a Friday evening in May 1991, and Bus No. 8332 is picking up passengers at Eastern Avenue and Broadway when the driver "hears a little tap."

A passing messenger truck has clipped the tire well of the bus, bending the truck's side mirror, according to a report filed by the bus driver. No other damage is found; the mirror isn't even broken. A Baltimore police officer declines to file a report.

But 18 months later, the encounter has become an active "claim file" that could be costly for taxpayers and people who pay bus and rail fares in the Baltimore area.

Three of the 25 passengers who were aboard the Mass Transit Administration bus allege that the accident has caused them thousands of dollars in medical bills and lost wages. At least one of the three has sued the state agency, for $20,000 in damages, including compensation for the pain and suffering the incident has caused him.

Welcome to the world of mass transit litigation, where fender-benders can become drawn-out, legal debacles. It's a highly profitable pursuit for claimants, but an expensive one for the rest of us.

"We are trapped by the justice system," complained Ronald R. Berndt, the MTA's assistant general manager for finance. "It's a very expensive proposition to pay for all the injuries that are claimed."

About 3,000 to 4,000 liability demands are brought against the MTA each year, as many as are filed against all other state agencies combined. Relatively few are brought to trial. The transit agency settles one out of three claims, paying a paltry $2,500 or less in nearly all cases.

But with so many claims, the costs add up quickly. In an average year, the MTA pays between $3 million to $5 million to settle 1,100 to 1,200 claims, primarily involving its fleet of buses.

Add the expenses of staff, insurance and legal fees and the total comes to 4 percent of the MTA's annual operating budget of $167 million, or $6 million this year. That is more money than will be raised by the proposed fare increase -- 15 cents on the base fare -- that is scheduled to go into effect Jan. 17.

The agency is trying to reduce its costs by fighting claims and building up better cases against plaintiffs. Among other things, it has been more actively tracking down witnesses and immediately investigating accidents.

Since September 1991, the MTA has retained its own staff of claims adjusters who are dispatched to accident scenes. Too often in the past, state officials believe, privately employed adjusters under contract to the MTA wanted to quickly process paperwork and didn't quibble enough over claims.

"We have to investigate every claim to see if it's credible," said Leonard A. Fortner, the MTA's director of risk management.

How many of the claims filed against the agency are exaggerated or possibly fraudulent? MTA officials will not hazard a guess, but they say that fighting suspicious cases can be as costly as paying damages. It is a problem that has plagued every mass transit system in the country.

Consider the experience of Philadelphia, just 104 miles northeast of Baltimore. Philadelphia's Southeast Pennsylvania Transportation Authority spends a higher percentage of its budget -- more than twice what Baltimore spends -- to settle liability claims that any other transit system in the country.

Officials there have gone so far as to install video cameras in buses -- pointed at the passengers, not the road -- to record accident scenes. This year, the agency expects to pay $40 million in claims.

The city attracted national attention for an incident in which a car sideswiped an empty bus and 11 lawsuits were filed by people who claimed to be on board. Recently, two people were prosecuted for "bus chasing," a scheme in which one person drives his car into a bus so that associates aboard the bus can claim injuries.

"Phony claims are like a cottage industry here," said James M. Kilcur, the authority's general counsel. "It's gotten completely out of hand. It's the kind of thing that gives lawyers a bad name."

Fighting back

Nationwide, neither the government nor public transit advocates have estimates about what proportion of the claims are fraudulent or overblown. Many of them allege soft tissue injuries in the back or neck that are difficult to disprove.

Some transit agencies have fought back using advertising campaigns discouraging "Lawsuit Abuse," with posters advertising a hot line to report fraudulent claims.

"The story we get everywhere we go is that there is a terrible problem," said Martin F. Connor, president of the American Tort Reform Association, a coalition of 400 organizations that want to reduce transit litigation costs. "They've been besieged with what they think are, in substantial part, groundless claims."